(In reference to ‘A lack of financial literacy skills exacerbates the economic impact of COVID-19’)
Summary:
Thanks to a general lack of financial education, much of the UK population was ill-prepared to withstand the economic shock of COVID-19. One in three of us had savings of less than £600; one in ten hadn’t any savings at all (creditfix.co.uk). Poverty and unemployment are among the most intractable issues for a government to tackle, but a relatively straightforward and impactful resolution would be to make financial literacy a standalone subject on the national curriculum. This would ensure students have a dedicated opportunity to learn, and by including it within Ofsted’s education inspection framework, teachers would have access to necessary resources, training, and advice. That way, the next generation will be better prepared for the next economic downturn.
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This initiative would be a tangible way of delivering against the government’s Levelling Up agenda, as a knowledge of compound interest benefits a young person’s wealth whether they are from Redcar or Basingstoke. Moreover, there is no shortage of informed and well-placed partners to assist with implementing a dedicated curriculum, from Martin Lewis, the Money Saving Expert, personally funded the roll-out of 340,000 financial textbooks to state schools; to the Financial Times, who have just launched their own financial literacy foundation, aimed at tackling this very issue in adults.
Any proposed curriculum could address three key areas: first, the key concepts of personal finance. Savings and interest, debt, inflation, and a discussion about what constitutes value for money and how that might differ from person to person. It should also approach security and fraud, as there is no shortage of scams and get-rich-quick schemes that young people are exposed to online.
Second, an explanation of the most common financial products: debit and credit cards, mortgages, pensions, and safe investing vehicles such as an ISA. Discussions might focus on how a young person can get on the housing ladder, or how student loans work. After all, it has been shown that a lack of understanding in this area makes it less likely for a pupil to apply for university at all (Callender, C. and Mason, G., Does Student Loan Debt Deter Higher Education Participation? UCL, 2017).
Finally, there is a fantastic opportunity to tie personal finance to the big picture topics. We know young people are more engaged than ever with the world they’ll inherit. Alongside the traditional understanding of how they might be affected by the Chancellor’s budget, students could learn how money and investment can meaningfully impact the ESG (environmental, social, governance) agenda: affecting corporate change through shareholder activism rather than obstructive street protests.
COVID-19 has underlined the need for financial skills: many of us will be unable to budget for the lean times or risk falling into unsustainable debt. Beyond that direct need, this is a straightforward opportunity to build back better after the pandemic. By providing a basic financial education, we are not only giving young people the tools to improve their own fortunes during the good times, but giving them a shield to prepare for the next inevitable downturn.
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